Renewables vs. Conventional Energies: How to Make Them Work Together?

The Climate Change threat doesn’t leave us much choice but to transform our current economy into a “low carbon economy”. While it is well acknowledged that renewable energy (RE) sources like solar, wind or even biomass could lead us towards that goal, conventional energy sources like coal, natural gas or oil will still play a role in satisfying the energy demand of tomorrow. How should we ensure the emergence of RE while still developing conventional energy sources in order to guarantee energy security and access for all?

Using renewables will allow us to produce the energy we need, without compromising the environment. However, two main obstacles go against their emergence. The first one is the financial barrier: the high priced technology characteristic of this particular industry makes it an economically unfeasible option for businesses and individuals. The second factor is the yet non-existent technology that will make renewables less constraining and more reliable. This is especially true within the electricity sector, where energy sources like solar or wind are intermittent (solar only works when there is sunlight, and wind turbines can only be used when the wind is blowing).

When it comes to conventional energy resources, they are still going to be part of our agenda despite being a major contributor of the Climate Change. This is because the energy demand to satisfy the population and the dynamism of the economy is ever growing. EIA projects 29 percent growth in US electricity demand by 2040. For the next 2 years, a worldwide oil increase demand of about 1.3 millions bbl/day is expected as well. But the battle against climate change has to start today. According to a recent report from the United Nations we are already polluting more than we should. In order to foresee a future for the conventional energy industry, initiatives have to be undertaken to mitigate the emissions they are responsible for.

To make renewable and conventional energies work together in a climate change context, the government role in the energy markets has to be clearly defined.

Energy project approvals (pipeline constructions, oil/gas drillings, hydro-dams) have to be in the hands of the private sector. Private companies have a better understanding of the science, technology and risks involved in these projects. They have more to lose than the government, if a project was to go wrong. Comprehensive reports should however be made available to governmental institutions and the Public to open discussions before final decisions are made. In doing so, government institutions will be aware of what is going on, and will have the opportunity to make evaluations/suggestions aiming to ensure safety of the populations and the environment.

An area where the government should intervene is in the financial support of these projects. This is particularly true for the renewable industry where projects have high upfront capital costs and long payback periods. Proposing incentives and subsidies are key initiatives that will allow both the renewable and the conventional industries to progress.

When it comes to policies, perhaps the most proactive policy the American government can do in favor of renewables is to develop a comprehensive tax reform bill that will implement green energy tax credits. While Congress has voted to extend green energy tax credits 14 times since 1978, each renewal only consisted of an extension of only a year or two, and revived the debate over the need for continued subsidies.

“Look at how permanent tax incentives have allowed the fossil fuel industry to make long-term capital investments […] having legislation that allows you to look more than one or two years over the horizon is crucial,”

said Julia Bovey, an executive of the Boston-based First Wind farm company. Designing a bill framework that will enable longer term forecasting for the clean industry will provide greater interest for the investors, as well as making them feel more secure about their investments.

As far as conventional energy sources are concerned, the government should focus on maximizing system efficiency. A recent report from the EIA affirmed that nearly 73% of the coal-fired plants in the U.S have at least 30 years of age, for a life expectancy of about 35 to 50 years. Upgrading all these power plants to the latest technologies could critically reduce emissions since a mere 1 percent efficiency improvement translates to a 2 to 3 percent reduction in emissions. Also, establishing pollution standards for power plants and fuel standards in the transportation sector are key regulations that will allow the safer development of fossil based energy resources.

Facing the growing demand for energy, the development of both renewable and conventional energy resources is needed to ensure energy access and security. Economic development goes hand in hand with fighting the climate change threat. However, for this to happen, the U.S. has to implement proactive policies, which include but are not limited to developing a comprehensive energy reform bill, generating the subsidies and incentives that will introduce the newest technology to the market, or setting up fuel and pollution standards. In doing so, both renewables and fossil fuel based energy sources will contribute as conscientious options for the future.